Normalized FFO of $0.43 Per Share
Same Property NOI Growth Across all Property Segments
NEWTON, Mass.--(BUSINESS WIRE)--
Senior Housing Properties Trust (NYSE:SNH) today announced its financial
results for the quarter and six months ended June 30, 2014.
SNH President and Chief Operating Officer David Hegarty made the
following statement:
"SNH's second quarter results improved as we reported same property NOI
growth across all property types, we completed the $1.1 billion
acquisition of the Vertex Pharmaceuticals headquarters located in the
Seaport District of Boston, and we successfully completed a disciplined
capital raising program to finance that acquisition so as to produce
accretive results for shareholders. In addition, SNH remains active in
selectively pursuing acquisitions and dispositions to further strengthen
its senior housing and medical office portfolios."
Results for the quarter ended June 30, 2014:
Normalized funds from operations, or Normalized FFO, for the quarter
ended June 30, 2014 were $86.6 million, or $0.43 per share. This
compares to Normalized FFO for the quarter ended June 30, 2013 of $79.1
million, or $0.42 per share.
Net income was $37.7 million, or $0.19 per share, for the quarter ended
June 30, 2014, compared to net income of $5.6 million, or $0.03 per
share, for the quarter ended June 30, 2013. During the three months
ended June 30, 2014, SNH recognized: (1) a gain on sale of properties of
$2.4 million, or $0.01 per share, related to the sale of two senior
living communities previously classified as held for sale; and (2)
impairment of assets adjustments of $387,000, or less than $0.01 per
share, to add back previously recorded impairments to the carrying value
of two properties (two buildings) leased to medical providers, medical
related businesses, clinics and biotech laboratory tenants, or MOBs,
included in discontinued operations to their actual net sales prices
realized during the second quarter. During the three months ended June
30, 2013, SNH recognized: (1) impairment of assets charges of $4.4
million, or $0.02 per share, to reduce the carrying value of four senior
living communities to their aggregate estimated net sale price; (2) a
loss of $105,000, or less than $0.01 per share, related to the early
extinguishment of four mortgage debts; and (3) impairment of assets
charges of $27.9 million, or $0.15 per share, to reduce the carrying
value of four MOBs (seven buildings) included in discontinued operations
to their aggregate estimated net sale price.
The weighted average number of common shares outstanding were 199.8
million and 188.1 million for the quarters ended June 30, 2014 and 2013,
respectively.
A reconciliation of net income determined in accordance with U.S.
generally accepted accounting principles, or GAAP, to funds from
operations, or FFO, and Normalized FFO for the quarters ended June 30,
2014 and 2013 appears later in this press release.
Results for the six months ended June 30, 2014:
Normalized FFO for the six months ended June 30, 2014 were $166.7
million, or $0.86 per share. This compares to Normalized FFO for the six
months ended June 30, 2013 of $158.1 million, or $0.85 per share.
Net income was $76.2 million, or $0.39 per share, for the six months
ended June 30, 2014, compared to net income of $40.8 million, or $0.22
per share, for the six months ended June 30, 2013. During the six months
ended June 30, 2014, SNH recognized: (1) a gain on sale of properties of
$2.6 million, or $0.01 per share, related to the sale of three senior
living communities previously classified as held for sale; and (2)
impairment of assets charges of $334,000, or less than $0.01 per share,
to adjust the carrying value of one MOB (four buildings) included in
discontinued operations to their aggregate estimated net sale price,
which charge was partially offset by the add back of previously recorded
impairments to the carrying value of two MOBs (two buildings) to their
net sales prices. During the six months ended June 30, 2013, SNH
recognized: (1) impairment of assets charges of $5.7 million, or $0.03
per share, to reduce the carrying value of four senior living
communities and one parcel of land included in continuing operations to
their aggregate estimated net sale price; (2) a loss of $105,000, or
less than $0.01 per share, related to the early extinguishment of four
mortgage debts; and (3) impairment of assets charges of $27.9 million,
or $0.15 per share, to reduce the carrying value of four MOBs (seven
buildings) included in discontinued operations to their aggregate
estimated net sale price.
The weighted average number of common shares outstanding were 194.0
million and 186.4 million for the six months ended June 30, 2014 and
2013, respectively.
A reconciliation of net income determined in accordance with GAAP to FFO
and Normalized FFO for the six months ended June 30, 2014 and 2013
appears later in this press release.
Operating Results:
For the three months ended June 30, 2014, 43.5% of SNH's consolidated
net operating income, or NOI, came from 218 triple net leased senior
living communities with 24,383 living units. Occupancy at triple net
leased senior living communities was 85.2% during the most recent
reported period, compared to 85.6% during the comparable period last
year. (1) Same property occupancy for triple net leased
senior living communities owned continuously from April 1, 2013
decreased 0.6 percentage points to 85.2% during the most recent reported
period, from 85.8% during the comparable period last year.(1)
Same property NOI increased 2.2% during the quarter ended June 30, 2014.
For the three months ended June 30, 2014, 14.5% of SNH's NOI came from
44 managed senior living communities with 7,051 living units. Occupancy
at managed senior living communities was 88.5% during the quarter ended
June 30, 2014, compared to 87.4% during the comparable period last year.
Same property occupancy for managed senior living communities owned
continuously since April 1, 2013 increased 0.9 percentage points to
88.3% during the quarter ended June 30, 2014, from 87.4% during the
comparable period last year. Same property NOI increased 6.4% during the
quarter ended June 30, 2014.
For the three months ended June 30, 2014, 38.5% of SNH's NOI came from
98 MOBs with 9.1 million square feet. As of June 30, 2014, 95.6% of MOB
square feet was leased, compared to 95.0% as of March 31, 2014 and 94.1%
as of June 30, 2013. Same property occupancy for MOBs owned continuously
since April 1, 2013 increased 0.7 percentage points to 94.8% as of June
30, 2014, from 94.1% as of June 30, 2013. Same property cash basis NOI
increased 1.3% during the quarter ended June 30, 2014.
A reconciliation of NOI and cash basis NOI to net income, determined in
accordance with GAAP, for the quarters ended June 30, 2014 and 2013
appears later in this press release.
Recent Investment and Sales Activities:
Since April 1, 2014, SNH has acquired two properties. In April 2014, SNH
acquired one MOB (one building) with 125,240 square feet for
approximately $32.7 million, including the assumption of $15.6 million
of mortgage debt, excluding closing costs. This property is known as the
Texas Center for Athletes and it is located in the South Texas Medical
Center area of San Antonio, TX. In May 2014, SNH acquired one property
(two buildings) with approximately 1,651,037 gross building square feet
for approximately $1.125 billion, excluding closing costs. This recently
built property is certified by the U.S. Green Building Council as a
LEED® Gold property and it is located on the waterfront in Boston's
Seaport District, Boston's fastest growing submarket. The property is
96% leased to Vertex Pharmaceuticals Incorporated, or Vertex, for an
initial term ending in 2028.
(1) Most recent reported data is based upon the operating
results provided by our tenants for the 12 months ended March 31, 2014
and 2013 or the most recent prior period for which tenant operating
results are available.
In July 2014, SNH entered into an agreement to acquire one senior living
community with 52 private pay assisted living units located in Jackson,
WI, for approximately $7.0 million, excluding closing costs. SNH intends
to acquire this community using a taxable REIT subsidiary structure and
it expects to enter into a long term management agreement with Five Star
Quality Care, Inc. to manage this community.
In April 2014, SNH sold one MOB (one building) with 210,879 square feet
located in New Hampshire for $5.0 million, excluding closing costs, and
in June 2014, SNH sold another MOB (one building) with 235,079 square
feet located in Pennsylvania for $6.0 million, excluding closing costs
and recorded no gain or loss on these sales.
In June 2014, SNH sold two skilled nursing facilities with 156 units
located in Wisconsin for $4.5 million, excluding closing costs. As a
result, SNH recorded a gain on sale of $2.4 million.
SNH is also currently marketing for sale seven senior living communities
with 552 living units and two MOBs (five buildings) with an aggregate of
385,541 square feet. The majority of the combined revenues generated
from the seven senior living communities listed for sale comes from
government funded programs, such as Medicare and Medicaid. The results
of operations from the two MOBs (five buildings) listed for sale and the
two MOBs (two buildings) sold during the second quarter are included in
discontinued operations in SNH's financial statements.
Recent Financing Activities:
In April 2014, SNH issued 15,525,000 common shares in a public offering,
raising gross proceeds of approximately $337.7 million, before
underwriting discounts and expenses. SNH used the net proceeds of this
offering (approximately $323.3 million after underwriting discounts but
before expenses) to repay borrowings outstanding under its unsecured
revolving credit facility, with the remainder used for general business
purposes, including the partial funding of the acquisition of the
property leased to Vertex described above.
In April 2014, SNH sold $400 million of 3.25% senior unsecured notes due
2019 and $250 million of 4.75% senior unsecured notes due 2024, raising
net proceeds of approximately $644.9 million after underwriting
discounts but before expenses. SNH used the net proceeds of this
offering for general business purposes, including partially funding the
acquisition of the property leased to Vertex described above.
In May 2014, SNH entered into a term loan agreement with Wells Fargo
Bank, National Association and a syndicate of other lenders, pursuant to
which SNH obtained a $350.0 million unsecured term loan. This term loan
matures on January 15, 2020, and is prepayable without penalty at any
time. In addition, the term loan includes a feature under which maximum
borrowings may be increased to up to $700.0 million in certain
circumstances. The term loan bears interest at a rate of LIBOR plus a
premium of 140 basis points that is subject to adjustment based upon
changes to SNH's senior unsecured debt ratings. SNH used the net
proceeds of its term loan to repay amounts outstanding under its
revolving credit facility, to repay existing mortgage notes and for
general business purposes.
In June 2014, SNH repaid mortgage notes at maturity that encumbered two
of its properties that had an aggregate principal balance of $35.3
million and a weighted average interest rate of 5.8%.
Conference Call:
On Monday, August 4, 2014, at 1:00 p.m. Eastern Time, David J. Hegarty,
President and Chief Operating Officer, and Richard A. Doyle, Chief
Financial Officer, will host a conference call to discuss the financial
results for the quarter and six months ended June 30, 2014. The
conference call telephone number is (800) 230-1085. Participants calling
from outside the United States and Canada should dial (612) 288-0329. No
pass code is necessary to access the call from either number.
Participants should dial in about 15 minutes prior to the scheduled
start of the call. A replay of the conference call will be available
through 11:59 p.m. Eastern Time, Monday, August 11, 2014. To hear the
replay, dial (320) 365-3844. The replay pass code is: 332523.
A live audio web cast of the conference call will also be available in
listen only mode on the SNH website at www.snhreit.com. Participants
wanting to access the webcast should visit the website about five
minutes before the call. The archived webcast will be available for
replay on the SNH website for about one week after the call.
The transcription, recording and retransmission in any way of SNH's
second quarter conference call are strictly prohibited without the prior
written consent of SNH.
Supplemental Data:
A copy of SNH's Second Quarter 2014 Supplemental Operating and Financial
Data is available for download from the SNH website, www.snhreit.com.
SNH's website is not incorporated as part of this press release.
SNH is a real estate investment trust, or REIT, that owned 372
properties (399 buildings) located in 39 states and Washington, D.C. as
of June 30, 2014. SNH is headquartered in Newton, MA.
Please see the pages attached hereto for a more detailed statement of
SNH's operating results and financial condition.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER SNH USES
WORDS SUCH AS "BELIEVE", "EXPECT", "ANTICIPATE", "INTEND", "PLAN",
"ESTIMATE" OR SIMILAR EXPRESSIONS, SNH IS MAKING FORWARD LOOKING
STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON SNH'S
PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS
ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
-
THIS PRESS RELEASE STATES THAT SNH HAS ENTERED INTO AN AGREEMENT TO
ACQUIRE ONE SENIOR LIVING COMMUNITY. THIS TRANSACTION IS SUBJECT TO
CLOSING CONDITIONS. THESE CONDITIONS MAY NOT BE MET. AS A RESULT, THIS
TRANSACTION MAY NOT OCCUR OR MAY BE DELAYED OR ITS TERMS MAY CHANGE;
-
THIS PRESS RELEASE STATES THAT SNH HAS SEVEN SENIOR LIVING COMMUNITIES
AND TWO MOBS CURRENTLY LISTED FOR SALE. SNH MAY NOT BE ABLE TO SELL
THESE PROPERTIES ON TERMS ACCEPTABLE TO IT OR OTHERWISE, AND THE SALES
OF ANY OR ALL OF THESE PROPERTIES MAY NOT OCCUR;
-
INCREASING THE MAXIMUM BORROWINGS UNDER SNH'S TERM LOAN IS SUBJECT TO
SNH OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT
OCCUR; AND
-
THIS PRESS RELEASE STATES THAT SNH EXPECTS TO ENTER INTO A LONG TERM
MANAGEMENT AGREEMENT WITH FIVE STAR TO MANAGE A SENIOR LIVING
COMMUNITY SNH HAS AGREED TO ACQUIRE. HOWEVER, THERE CAN BE NO
ASSURANCE THAT SNH WILL ACQUIRE THIS COMMUNITY OR THAT SNH AND FIVE
STAR WILL ENTER INTO ANY ADDITIONAL MANAGEMENT AGREEMENTS.
THE INFORMATION CONTAINED IN SNH'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION "RISK FACTORS"
IN ITS PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER
IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM SNH'S FORWARD
LOOKING STATEMENTS. SNH'S FILINGS WITH THE SEC ARE AVAILABLE ON THE
SEC'S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON SNH'S FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, SNH DOES NOT INTEND TO UPDATE OR CHANGE ANY
FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.
|
SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
|
$
|
127,669
|
|
$
|
112,297
|
|
$
|
239,724
|
|
$
|
224,150
|
|
|
Residents fees and services
|
|
|
|
79,039
|
|
|
74,631
|
|
|
158,481
|
|
|
149,687
|
|
|
|
Total revenues
|
|
|
|
206,708
|
|
|
186,928
|
|
|
398,205
|
|
|
373,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses
|
|
|
|
79,786
|
|
|
74,484
|
|
|
157,590
|
|
|
148,163
|
|
|
Depreciation
|
|
|
|
46,703
|
|
|
38,296
|
|
|
85,058
|
|
|
75,999
|
|
|
General and administrative
|
|
|
|
9,577
|
|
|
8,168
|
|
|
17,866
|
|
|
16,816
|
|
|
Acquisition related costs
|
|
|
|
2,512
|
|
|
292
|
|
|
2,635
|
|
|
2,187
|
|
|
Impairment of assets
|
|
|
|
-
|
|
|
4,371
|
|
|
-
|
|
|
5,675
|
|
|
|
Total expenses
|
|
|
|
138,578
|
|
|
125,611
|
|
|
263,149
|
|
|
248,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
68,130
|
|
|
61,317
|
|
|
135,056
|
|
|
124,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
|
154
|
|
|
397
|
|
|
258
|
|
|
570
|
|
Interest expense
|
|
|
|
(34,112)
|
|
|
(29,567)
|
|
|
(63,012)
|
|
|
(59,131)
|
|
Loss on early extinguishment of debt
|
|
|
|
-
|
|
|
(105)
|
|
|
-
|
|
|
(105)
|
|
Income from continuing operations before income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and equity in earnings of an investee
|
|
|
|
34,172
|
|
|
32,042
|
|
|
72,302
|
|
|
66,331
|
|
Income tax expense
|
|
|
|
(155)
|
|
|
(140)
|
|
|
(346)
|
|
|
(280)
|
|
Equity in earnings of an investee
|
|
|
|
118
|
|
|
79
|
|
|
21
|
|
|
155
|
|
Income from continuing operations
|
|
|
|
34,135
|
|
|
31,981
|
|
|
71,977
|
|
|
66,206
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
|
741
|
|
|
1,513
|
|
|
2,041
|
|
|
2,523
|
|
|
|
Impairment of assets from discontinued operations
|
|
|
|
387
|
|
|
(27,896)
|
|
|
(334)
|
|
|
(27,896)
|
|
Income before gain on sale of properties
|
|
|
|
35,263
|
|
|
5,598
|
|
|
73,684
|
|
|
40,833
|
|
Gain on sale of properties
|
|
|
|
2,396
|
|
|
-
|
|
|
2,552
|
|
|
-
|
|
Net income
|
|
|
$
|
37,659
|
|
$
|
5,598
|
|
$
|
76,236
|
|
$
|
40,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
199,810
|
|
|
188,081
|
|
|
194,025
|
|
|
186,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per share
|
|
|
|
0.18
|
|
|
0.17
|
|
|
0.38
|
|
|
0.36
|
|
Income (loss) from discontinued operations per share
|
|
|
|
0.01
|
|
|
(0.14)
|
|
|
0.01
|
|
|
(0.14)
|
|
Net income per share
|
|
|
$
|
0.19
|
|
$
|
0.03
|
|
$
|
0.39
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS AND NORMALIZED
FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
|
|
|
|
|
Calculation of Funds from Operations (FFO) and Normalized FFO
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
37,659
|
|
$
|
5,598
|
|
$
|
76,236
|
|
$
|
40,833
|
|
Depreciation expense from continuing operations
|
|
|
|
|
46,703
|
|
|
38,296
|
|
|
85,058
|
|
|
75,999
|
|
Depreciation expense from discontinued operations
|
|
|
|
|
-
|
|
|
199
|
|
|
-
|
|
|
799
|
|
Gain on sale of properties
|
|
|
|
|
(2,396)
|
|
|
-
|
|
|
(2,552)
|
|
|
-
|
|
Impairment of assets
|
|
|
|
|
-
|
|
|
4,371
|
|
|
-
|
|
|
5,675
|
|
Impairment of assets from discontinued operations
|
|
|
|
|
(387)
|
|
|
27,896
|
|
|
334
|
|
|
27,896
|
|
|
FFO
|
|
|
|
|
81,579
|
|
|
76,360
|
|
|
159,076
|
|
|
151,202
|
|
Estimated business management incentive fees (2)
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
75
|
|
Acquisition related costs from continuing operations
|
|
|
|
|
2,512
|
|
|
292
|
|
|
2,635
|
|
|
2,187
|
|
Loss on early extinguishment of debt
|
|
|
|
|
-
|
|
|
105
|
|
|
-
|
|
|
105
|
|
Percentage rent adjustment (3)
|
|
|
|
|
2,500
|
|
|
2,300
|
|
|
5,000
|
|
|
4,500
|
|
|
Normalized FFO
|
|
|
|
$
|
86,591
|
|
$
|
79,057
|
|
$
|
166,711
|
|
$
|
158,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
199,810
|
|
|
188,081
|
|
|
194,025
|
|
|
186,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share
|
|
|
|
$
|
0.41
|
|
$
|
0.41
|
|
$
|
0.82
|
|
$
|
0.81
|
|
Normalized FFO per share
|
|
|
|
$
|
0.43
|
|
$
|
0.42
|
|
$
|
0.86
|
|
$
|
0.85
|
|
Net income per share
|
|
|
|
$
|
0.19
|
|
$
|
0.03
|
|
$
|
0.39
|
|
$
|
0.22
|
|
Distributions declared per share
|
|
|
|
$
|
0.39
|
|
$
|
0.39
|
|
$
|
0.78
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) SNH calculates FFO and Normalized FFO as shown above. FFO is
calculated on the basis defined by The National Association of Real
Estate Investment Trusts, or NAREIT, which is net income, calculated in
accordance with GAAP, excluding any gain or loss on sale of properties
and impairment of real estate assets, plus real estate depreciation and
amortization, as well as certain other adjustments currently not
applicable to SNH. SNH's calculation of Normalized FFO differs from
NAREIT's definition of FFO because SNH's includes estimated percentage
rent in the period to which it estimates that it relates rather than
when it is recognized as income in accordance with GAAP and excludes
acquisition related costs, gain or loss on early extinguishment of debt,
gain or loss on lease terminations, estimated business management
incentive fees and loss on impairment of intangible assets, if any. SNH
considers FFO and Normalized FFO to be appropriate measures of operating
performance for a real estate investment trust, or REIT, along with net
income, operating income and cash flow from operating activities. SNH
believes that FFO and Normalized FFO provide useful information to
investors because by excluding the effects of certain historical
amounts, such as depreciation expense, FFO and Normalized FFO may
facilitate a comparison of its operating performance between periods and
with other REITs. FFO and Normalized FFO are among the factors
considered by SNH's Board of Trustees when determining the amount of
distributions to shareholders. Other factors include, but are not
limited to, requirements to maintain its status as a REIT, limitations
in its revolving credit facility agreement, term loan agreement and
public debt covenants, the availability of debt and equity capital,
SNH's expectation of its future capital requirements and operating
performance and SNH's expected needs and availability of cash to pay its
obligations. FFO and Normalized FFO do not represent cash generated by
operating activities in accordance with GAAP and should not be
considered as alternatives to net income, operating income or cash flow
from operating activities, determined in accordance with GAAP, or as
indicators of SNH's financial performance or liquidity, nor are these
measures necessarily indicative of sufficient cash flow to fund all of
SNH's needs. These measures should be considered in conjunction with net
income, operating income and cash flow from operating activities as
presented in SNH's Consolidated Statements of Income and Comprehensive
Income and Consolidated Statements of Cash Flows. Other REITs and real
estate companies may calculate FFO and Normalized FFO differently than
SNH does.
(2) Amounts represent estimated incentive fees under SNH's business
management agreement payable in common shares after the end of each
calendar year calculated: (i) prior to 2014 based upon increases in
annual Normalized FFO per share and (ii) beginning in 2014 based on
common share total return. In calculating net income in accordance with
GAAP, SNH recognizes an estimated business management incentive fee
expense, if any, each quarter. Although SNH recognizes this expense each
quarter for purposes of calculating net income, SNH does not include
these amounts in the calculation of Normalized FFO until the fourth
quarter, which is when the actual expense amount for the year is
determined. Adjustments were made to prior period amounts to conform to
the current period Normalized FFO calculation.
(3) In calculating net income in accordance with GAAP, SNH recognizes
percentage rental income received for the first, second and third
quarters in the fourth quarter, which is when all contingencies are met
and the income is earned. Although SNH defers recognition of this
revenue until the fourth quarter for purposes of calculating net income,
it includes these estimated amounts in its calculation of Normalized FFO
for each quarter of the year. The fourth quarter Normalized FFO
calculation excludes the amounts included during the first three
quarters.
|
SENIOR HOUSING PROPERTIES TRUST
CALCULATION AND RECONCILIATION OF NET OPERATING INCOME (NOI)
AND CASH BASIS NOI
(amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
|
|
|
6/30/2014
|
|
6/30/2013
|
|
6/30/2014
|
|
6/30/2013
|
|
Calculation of NOI (1):
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
|
$
|
127,669
|
|
|
$
|
112,297
|
|
|
$
|
239,724
|
|
|
$
|
224,150
|
|
|
Residents fees and services
|
|
|
|
79,039
|
|
|
|
74,631
|
|
|
|
158,481
|
|
|
|
149,687
|
|
|
|
Total revenues
|
|
|
|
206,708
|
|
|
|
186,928
|
|
|
|
398,205
|
|
|
|
373,837
|
|
|
Property operating expenses
|
|
|
|
79,786
|
|
|
|
74,484
|
|
|
|
157,590
|
|
|
|
148,163
|
|
|
|
Property net operating income (NOI):
|
|
|
|
126,922
|
|
|
|
112,444
|
|
|
|
240,615
|
|
|
|
225,674
|
|
|
Non cash straight line rent adjustments
|
|
|
|
(2,351
|
)
|
|
|
(1,939
|
)
|
|
|
(3,929
|
)
|
|
|
(3,846
|
)
|
|
Lease value amortization
|
|
|
|
(569
|
)
|
|
|
916
|
|
|
|
153
|
|
|
|
1,834
|
|
|
Lease termination fees
|
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
Cash Basis NOI
|
|
|
$
|
124,002
|
|
|
$
|
111,417
|
|
|
$
|
236,839
|
|
|
$
|
223,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Cash Basis NOI to Net
Income:
|
|
|
|
|
|
|
|
|
|
|
Cash Basis NOI
|
|
|
$
|
124,002
|
|
|
$
|
111,417
|
|
|
$
|
236,839
|
|
|
$
|
223,658
|
|
|
Non cash straight line rent adjustments
|
|
|
|
2,351
|
|
|
|
1,939
|
|
|
|
3,929
|
|
|
|
3,846
|
|
|
Lease value amortization
|
|
|
|
569
|
|
|
|
(916
|
)
|
|
|
(153
|
)
|
|
|
(1,834
|
)
|
|
Lease termination fees
|
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
4
|
|
|
|
Property NOI
|
|
|
$
|
126,922
|
|
|
$
|
112,444
|
|
|
$
|
240,615
|
|
|
$
|
225,674
|
|
|
Depreciation expense
|
|
|
|
(46,703
|
)
|
|
|
(38,296
|
)
|
|
|
(85,058
|
)
|
|
|
(75,999
|
)
|
|
General and administrative expense
|
|
|
|
(9,577
|
)
|
|
|
(8,168
|
)
|
|
|
(17,866
|
)
|
|
|
(16,816
|
)
|
|
Acquisition related costs
|
|
|
|
(2,512
|
)
|
|
|
(292
|
)
|
|
|
(2,635
|
)
|
|
|
(2,187
|
)
|
|
Impairment of assets
|
|
|
|
-
|
|
|
|
(4,371
|
)
|
|
|
-
|
|
|
|
(5,675
|
)
|
|
|
Operating income
|
|
|
|
68,130
|
|
|
|
61,317
|
|
|
|
135,056
|
|
|
|
124,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
|
154
|
|
|
|
397
|
|
|
|
258
|
|
|
|
570
|
|
|
Interest expense
|
|
|
|
(34,112
|
)
|
|
|
(29,567
|
)
|
|
|
(63,012
|
)
|
|
|
(59,131
|
)
|
|
Loss on early extinguishment of debt
|
|
|
|
-
|
|
|
|
(105
|
)
|
|
|
-
|
|
|
|
(105
|
)
|
|
Income before income tax expense and
|
|
|
|
|
|
|
|
|
|
|
|
equity in earnings of an investee
|
|
|
|
34,172
|
|
|
|
32,042
|
|
|
|
72,302
|
|
|
|
66,331
|
|
|
Income tax expense
|
|
|
|
(155
|
)
|
|
|
(140
|
)
|
|
|
(346
|
)
|
|
|
(280
|
)
|
|
Equity in earnings of an investee
|
|
|
|
118
|
|
|
|
79
|
|
|
|
21
|
|
|
|
155
|
|
|
Income from continuing operations
|
|
|
|
34,135
|
|
|
|
31,981
|
|
|
|
71,977
|
|
|
|
66,206
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
|
741
|
|
|
|
1,513
|
|
|
|
2,041
|
|
|
|
2,523
|
|
|
|
Impairment of assets from discontinued operations
|
|
|
|
387
|
|
|
|
(27,896
|
)
|
|
|
(334
|
)
|
|
|
(27,896
|
)
|
|
Income before gain on sale of properties
|
|
|
|
35,263
|
|
|
|
5,598
|
|
|
|
73,684
|
|
|
|
40,833
|
|
|
Gain on sale of properties
|
|
|
|
2,396
|
|
|
|
-
|
|
|
|
2,552
|
|
|
|
-
|
|
|
|
Net income
|
|
|
$
|
37,659
|
|
|
$
|
5,598
|
|
|
$
|
76,236
|
|
|
$
|
40,833
|
|
(1) SNH calculates NOI as shown above excluding properties classified as
discontinued operations. SNH defines NOI as income from its real estate
less its property operating expenses. NOI excludes amortization of
capitalized tenant improvement costs and leasing commissions. SNH
defines Cash Basis NOI as NOI less non cash straight line rent
adjustments, lease value amortization and lease termination fees, if
any. SNH considers NOI and Cash Basis NOI to be appropriate supplemental
measures to net income because they may help both investors and
management to understand the operations of our properties. SNH uses NOI
and Cash Basis NOI internally to evaluate individual and company wide
property level performance, and it believes that NOI and Cash Basis NOI
provide useful information to investors regarding its results of
operations because these measures reflect only those income and expense
items that are incurred at the property level and may facilitate
comparisons of its operating performance between periods and with other
REITs. The calculation of NOI and Cash Basis NOI excludes certain
components of net income in order to provide results that are more
closely related to its properties' results of operations. NOI and Cash
Basis NOI do not represent cash generated by operating activities in
accordance with GAAP and should not be considered as an alternative to
net income, operating income or cash flow from operating activities
determined in accordance with GAAP, or as indicators of SNH's financial
performance or liquidity, nor are these measures necessarily indicative
of sufficient cash flow to fund all of its needs. These measures should
be considered in conjunction with net income, operating income and cash
flow from operating activities as presented in our Consolidated
Statements of Income and Comprehensive Income and Consolidated
Statements of Cash Flows. Other REITs and real estate companies may
calculate NOI and Cash Basis NOI differently than SNH does.
|
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Balance Sheet:
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
2014
|
|
2013
|
|
ASSETS
|
|
|
|
Real estate properties
|
|
$
|
6,167,692
|
|
$
|
5,263,625
|
|
Less accumulated depreciation
|
|
|
(909,021)
|
|
|
(840,760)
|
|
|
|
|
|
|
5,258,671
|
|
|
4,422,865
|
|
Cash and cash equivalents
|
|
|
79,392
|
|
|
39,233
|
|
Restricted cash
|
|
|
10,960
|
|
|
12,514
|
|
Deferred financing fees, net
|
|
|
33,500
|
|
|
27,975
|
|
Acquired real estate leases and other intangible assets, net
|
|
|
495,782
|
|
|
103,494
|
|
Other assets
|
|
|
138,550
|
|
|
158,585
|
|
Total assets
|
|
$
|
6,016,855
|
|
$
|
4,764,666
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
|
$
|
-
|
|
$
|
100,000
|
|
Unsecured term loan
|
|
|
350,000
|
|
|
-
|
|
Senior unsecured notes, net of discount
|
|
|
1,742,893
|
|
|
1,093,337
|
|
Secured debt and capital leases
|
|
|
672,761
|
|
|
699,427
|
|
Accrued interest
|
|
|
20,401
|
|
|
15,839
|
|
Assumed real estate lease obligations, net
|
|
|
128,207
|
|
|
12,528
|
|
Other liabilities
|
|
|
73,012
|
|
|
66,546
|
|
Total liabilities
|
|
|
2,987,274
|
|
|
1,987,677
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
3,029,581
|
|
|
2,776,989
|
|
Total liabilities and shareholders' equity
|
|
$
|
6,016,855
|
|
$
|
4,764,666
|
A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the New York Stock Exchange.
No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
Senior Housing Properties Trust
Kimberly Brown, 617-796-8237
Director,
Investor Relations
www.snhreit.com
Source: Senior Housing Properties Trust
News Provided by Acquire Media